31 Willamette L. Rev. 713 (1995)
Pacific First Bank v. New Morgan Park Corporation: Reasonable Withholding of Consent to Commercial Lease Assignments

handle is hein.journals/willr31 and id is 725 raw text is: PACIFIC FIRST BANK V. NEW MORGAN PARK
CORPORATION: REASONABLE WITHHOLDING
OF CONSENT TO COMMERCIAL LEASE
ASSIGNMENTS
PAUL J. WEDDLE*
I. INTRODUCTION
In July 1994, Oregon joined a growing number of jurisdic-
tions' that require a landlord2 to have reasonable grounds in or-
der to withhold consent to the assignment of a lease.3 This
* Second-Year Student, Willamette University College of Law.
1. As of January, 1995, at least fifteen states and the District of Columbia had
adopted, either formally or by implication, the requirement that commercial lessors
have reasonable grounds before withholding consent to assignment of a lease by the
tenant: Homa-Goff Interiors, Inc. v. Cowden, 350 So. 2d 1035 (Ala. 1977); Hendrickson
v. Freericks, 620 P.2d 205 (Alaska 1980); Campbell v. Westdahl, 715 P.2d 288 (Ariz. Ct.
App. 1985); Warmack v. Merchants Nat'l Bank of Fort Smith, 612 S.W.2d 733 (Ark.
1981); Kendall v. Ernest Pestana, Inc., 709 P.2d 837 (Cal. 1985); Warner v. Konover, 553
A.2d 1138 (Conn. 1989); 1010 Potomac Assocs. v. Grocery Mfrs., 485 A.2d 199 (D.C.
1984); Fernandez v. Vasquez, 397 So. 2d 1171 (Fla. Dist. Ct. App. 1981); Funk v. Funk,
633 P.2d 586 (Idaho 1981); Arrington v. Walter E. Heller Int'l Corp., 333 N.E.2d 50 (Iil.
App. Ct. 1975); Gamble v. New Orleans Housing Mart, Inc., 154 So. 2d 625 (La. Ct.
App. 1963); Julian v. Christopher, 575 A.2d 735 (Md. 1990); Newman v. Hinky Dinky
Omaha-Lincoln, Inc., 427 N.W.2d 50 (Neb. 1988); Boss Barbara, Inc. v. Newbill, 638
P.2d 1084 (N.M. 1982); Shaker Bldg. Co. v. Federal Lime and Stone Co., 277 N.E.2d 584
(Ohio 1971); Pacific First Bank v. New Morgan Park Corp., 319 Or. 342, 876 P.2d 761
(1994).
2. This Note uses the terms landlord and lessor, and tenant and lessee,
interchangeably. Although the relationship denoted by the terms lessor and lessee
embraces the entire range of leases, including leases of goods, etc., while landlord and
tenant refer to residential or commercial leases of real property, the distinction is not
critical in the context of this Note.
3. Although not critical for this discussion, an assignment differs in important re-
spects from a sublease. An assignment transfers the lessee's entire interest in the lease
to another party; a sublease transfers something less than the entire interest. For exam-
ple, a residential tenant who wishes to transfer the occupancy of an apartment while
away for the summer creates a sublease, which terminates upon the tenant's return.
The same tenant, who has no further need for the apartment, but is still bound by the
lease, will attempt to assign the interest to another, in order to be relieved of responsi-
bility for the premises. In terms of privity between the lessor and lessee, an assignment
severs the privity of estate between the lessor and the lessee, while a sublease creates an
additional privity of estate (between the lessor and the sublessee), leaving undiminished
the privity of estate between the lessor and the first lessee. Privity of contract between
the lessor and the original lessee is unaffected in either case. An important conse-

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